I think the right word is "bullshit". LLMs are neither delusional nor hallucinating since they have no beliefs or sensory input. The just generate loads of fertilizer and a lot of people like to spread it around.
This is the correct answer. It's not a hallucination. It's goal is to create something that seems like the truth despite the fact that it has no idea if it's actually being truthful. If a human were doing this we'd call them a bullshitter or of they were good at it, maybe even a bullshit artist.